Pfizer nears deal to acquire Medivation for close to $14 billion

Pfizer is in advanced talks to acquire U.S. cancer drug company Medivation Inc (MDVN.O) for close to $14 billion, as it seeks to boost its oncology portfolio, people familiar with the matter said on Sunday.

Pfizer has agreed to pay a little more than $80 per share for Medivation, one of the people said, a substantial premium to the $52.50 offer for Medivation that France's Sanofi SA (SASY.PA) made in April, which eventually resulted in the company putting itself up for sale. Medivation shares ended trading in New York on Friday at $67.16.

The strong acquisition interest in the San Francisco-based company illustrates how demand for new cancer treatments, which can possibly add years to patients' lives, could spell billions of dollars in revenue to the companies that own them.

Pfizer has so far prevailed in the auction for Medivation and could announce a deal as early as Monday, although the negotiations still could fall apart at the last minute, the people said. The deal is expected to be paid for by Pfizer in its entirety, or at least mostly, with cash, one of the people said.

The sources asked not to be identified because the negotiations are confidential. Pfizer and Medivation declined to comment. The Financial Times first reported on Pfizer nearing a deal for Medivation on Sunday.

Pfizer, whose oncology offerings include breast cancer drug Ibrance and several other promising immuno-oncology products, is now set to get access to Medivation's successful prostate cancer drug Xtandi, as well as Talazoparib, another breast cancer treatment under development by Medivation.

Medivation earlier this year rejected two acquisition offers from Sanofi, the latest for $58 per share in cash and $3 per share in the form of a contingent value right relating to the sales performance of Talazoparib.

However, Medivation agreed in July to share confidential information with potential buyers after Sanofi agreed to drop a campaign to oust Medivation's board of directors.

In its second-quarter earnings call earlier this month, Medivation reported continued double-digit year-over-year growth for Xtandi, affirming the company’s expectations of more than 50 percent revenue growth for the year.

Medivation also cited positive late-stage data for Talazoparib, a drug the company believes will account for a significant part of its long-term value.

(Reporting by Greg Roumeliotis in New York; Editing by Sandra Maler and Bill Trott)

Pfizer is nearing a deal worth about $14bn to acquire California biotechnology company Medivation, beating out a handful of its biggest rivals to win the auction for the sought-after cancer drugmaker.

People close to the talks said a deal between Pfizer, the world’s second-largest drugmaker, and Medivation could be announced as early as Monday, though they cautioned that the two sides were in the process of finalising their agreement.

Pfizer, which has a market value of $212bn, is planning to pay a premium of about one-third to Medivation’s closing share price of $67.16 at the end of last week, valuing the company’s equity at more than $14bn.

Pfizer defeated a number of suitors for Medivation including Celgene, Gilead and French drugmaker Sanofi, which had been pursuing the company for months.

Pfizer declined to comment and Medivation, which is being advised by JPMorgan Chase and Evercore, could not be reached immediately for comment.

San Francisco-based Medivation makes the world’s best-selling prostate cancer drug, Xtandi, which is forecast to generate $5.7bn in annual revenues by 2020. It is also developing an experimental drug called Talazoparib, known as a “parp inhibitor”, which is designed to stop tumour cells from multiplying by damaging their DNA.

Founded in 2004, Medivation became the subject of takeover talk after Sanofi tabled a $9.3bn offer at the end of April and then began a hostile pursuit of the company, which lasted two months. In July, Medivation rejected an improved offer from Sanofi, worth $58 a share or roughly $10bn, but agreed to sign confidentiality agreements with the French drugmaker and other interested buyers.

Shares in Medivation have already more than doubled in the last six months and are up 105 per cent over that period.

The deal would mark the return of Pfizer to big ticket deal making after its attempt to buy Dublin-based Allergan for $150bn was thwarted by the Obama administration, which wanted to stop the company moving its headquarters to Ireland, with its low-tax regime.

GSK, Amgen and Celgene among groups teaming up for Cancer Moonshot 2020 to trial experimental drugs Pfizer has historically been an also-ran in the race to develop new cancer drugs, but in recent years it has begun efforts to build a leading oncology franchise, buoyed by the success of its blockbuster breast cancer drug, Ibrance.

The purchase of Medivation will be one of its biggest deals in the oncology field, after it lost in the race to buy Pharmacyclics last year, which was eventually taken over by AbbVie for $21bn.

The company is also trying to catch up with rivals such as Merck and Bristol-Myers Squibb, which are selling new immunotherapy drugs that turn the body into a weapon against cancer, described by doctors as the most significant development in tackling the disease since chemotherapy.

Pfizer has signed a deal with Merck of Germany to develop similar medicines and believes it can gain lost ground by combining them with two or three more experimental drugs to achieve better results for patients.